We got one!
Bernie Ebbers, the former CEO and notorious bandit of WorldCom, the CEO folks
like me love to hate, was actually convicted today on all nine counts
levied against him including conspiracy, securities fraud, and "causing
the company to make false filings with securities regulators" (Wall
Street Journal, "Major Executive Trials", Jan, 14, 2005). His defense
that he knew nothing about accounting, not to mention how to do it poorly and
fraudulently, did not work with a jury who apparently saw instead a crafty and
wily coyote who knew his business inside-out. I think there is no finer moment
to declare an end to the "between
earnings complacency" than an Ides of March where the
public shows it can be serious about cleaning up the excesses of the bubble
era. Since the bulk of the earnings season ended around the finish of January, the
S&P 500 floated to new 52-week highs and a 3.4% return, the Dow Industrials
darted to new 52-week highs and a 4.8% return, and the droopy NASDAQ drifted
twice to the stubborn 2100 level for a 3.7% gain but is now right back near the
lows for the year…for the third time.

To make this
call even simpler, I provide to you a nearly year-long view of the 10-year Treasury
bond:

Note carefully
how the bond has gapped up above the resistance at 44 (4.40%). Note carefully
how strong this chart is looking again. Remember carefully that increasing bond
yields provide competition to stocks and go up as "bond ghouls" begin
to fear inflation. Until this bad boy closes that gap and continues lower, we
can pretty much forget about much more upside in the stock market. The energy and
commodities sectors should continue to motor along strong in this backdrop. But
if they continue to stumble, correct, and crumble, look out stagflation. Stay tuned
on this one.

Regardless, it
is clear the season of complacency has essentially ended, and it is time yet
again to ponder what this quarter's earnings hold for us. I currently see
little to get excited about outside of a few select sectors and stocks.

And now that
complacency is over, let's take one more quick look at some stock-bottom calls
I have made recently (Click here to read my standard
disclaimer when it comes to talking shop about stocks). EBAY has now fallen
BELOW the bottom I pointed out around $38. Nimble folks knew to get out after
the stock failed to breach the gap in mid to late
February. PLAY is hanging in there and actually looks poised to make another
big move up. Finally, SBUX is clinging desperately to its declining 50-day
moving average. When this stock finally decides to make a move away from this
resistance, the move should be swift and big.